[Congressional Record (Bound Edition), Volume 160 (2014), Part 6]
[Extensions of Remarks]
[Page 7756]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              CRUDE TRUTH

                                 ______
                                 

                              HON. TED POE

                                of texas

                    in the house of representatives

                          Friday, May 9, 2014

  Mr. POE of Texas. Mr. Speaker, we are in the middle of an American 
energy revolution, but the U.S. government is getting in the way. Until 
recently, U.S. crude production had been on a steady decline. In 1970, 
domestic production peaked at 9.6 million barrels a day. By 2008, we 
were almost half that with a mere 5 million barrels being pumped per 
day. Then, America did what America does best: innovate. New 
technologies of horizontal drilling and hydraulic fracturing that no 
one else in the world could do has increased U.S. crude production 56 
percent since 2008. By next year, according to the International Energy 
Agency, the U.S. will become the largest crude producer in the world. 
More than Saudi Arabia, more than Venezuela, and yes, more than Mr. 
Putin's Russia.
  But it is not all so rosy. The oil we drill here is what is 
characterized as light and sweet crude oil. However, the oil that our 
refiners can process in order to make crude into refined products, like 
vehicle gasoline, is heavy and sour. That's because these refineries 
were built before our energy revolution to process crude oil from 
places like Venezuela and North Africa. These refineries can process 
this heavy crude better than any other refineries in the world, but 
they cannot help us much when it comes to refining the oil that we are 
drilling right here at home. We need new refineries to be built to 
process this light crude, but that will take years. In the meantime, we 
should sell our light crude abroad instead of just letting it waste 
away here. That would bring billions of dollars and thousands of jobs 
to our economy. It is an obvious solution for a simple problem, but we 
cannot do it. Why? Because of outdated legislation.
  In 1975, Congress passed the Energy Policy and Conservation Act, 
making it illegal to export U.S. crude. It was the height of the Arab 
oil embargo, and Congress wanted to insulate Americans from global 
price shocks.
  The problem is that domestic gasoline prices are largely set by the 
global crude price--not the domestic price--since crude is a globally 
traded commodity. Of the crude oil we consume, 46% is imported. These 
imports are subject to market uncertainty just like every other traded 
good. Our energy revolution is actually not going to change that number 
much either. Our domestic refiners were made to process the heavy crude 
oil imported from such places like Venezuela and North Africa. But the 
oil that is coming out of the ground right here in the United States is 
light crude. Currently, refiners can mix a little of our light domestic 
crude with imported heavy crude to process it, but they cannot handle 
all of our domestic production. Not being able to export our extra 
domestic crude has caused the price to artificially drop. Economists 
predict that if the ban is not overturned, domestic crude production 
companies will not be able to make a profit and will have to decrease 
drilling in the next 18 to 36 months. If they are forced to cut back on 
drilling, they are going to also be forced to lay off hard working 
Americans.
  Refiners, who have no such ban on exporting the crude oil once they 
refine it, are reaping the benefits, buying our crude oil at these 
artificially low prices while selling their refined products abroad at 
the going global market rate. We do not prohibit the export of iPhones 
to keep the prices of iPhones artificially low here in the United 
States. Nor should we do the same when it comes to banning the export 
of our crude oil to subsidize our refineries. If refineries are allowed 
to export, so should producers. We should have no interest in 
subsidizing one part of the industry over another.
  If we lift the ban we would actually make domestic consumers less 
susceptible to global price shocks. Allowing our producers to export 
crude oil and add U.S. crude to the world market would lessen the 
market share of bad actors like Iran and Venezuela and unstable ones 
like Algeria and Libya. More U.S. crude on the market grows the pie and 
our share of it, making these countries' portions less impactful.
  The presence of U.S. crude could also drive down the global price of 
oil and thus the price Americans pay at the pump. The math is simple: 
more supply with the same amount of demand means a lower price. In a 
Congressional hearing last week, Elizabeth Rosenberg from the Center 
for a New American Security cited a study that showed domestic gasoline 
prices could drop between three to seven cents per gallon if the ban 
were lifted. More studies are expected to be released in the next few 
weeks.
  It is time to revisit the crude oil export ban. Last week, my 
Subcommittee held a hearing on this issue, bringing together 
representatives from both aspects of the industry, as well as Senator 
Lisa Murkowski and a renowned energy economist.
  We live in a completely different world today than we did when the 
ban was passed in 1975. Back then, U.S. troops were coming home from 
Vietnam, the Soviet Union still occupied East Germany, and Osama bin 
Laden just turned 18. America has changed considerably since those 
days. It's time for our energy policy to do the same. And that's just 
the way it is.

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